Share this article

Share

The figures reveal a nation in a profound crisis. Personal incomes
fell 2.4 per cent during the period, the worst decline in nearly 30
years. That prompted people to cut their savings sharply as their
finances were stretched by the credit crunch and unemployment soared.

Every sector of the business world saw declines in output -
including manufacturing, oil extraction, construction and services.
Only the public sector had a modest 0.2 per cent increase in activity.

The contraction will further undermine the reputation of Gordon
Brown, the man who pledged to bring an end to 'boom and bust' in
Britain.

On Monday the respected Organisation for Economic Co-operation and
Development said Britain was particularly vulnerable to the credit
crunch because we saved less and borrowed more than citizens of any
other top economy. It predicted a 2009 contraction of 4.3 per cent.

Troubled: Chancellor Alistair Darling

Ross Walker of Royal Bank of Scotland said: '"You've never had it so bad" seems the most apt summary of the state of the UK economy in the first quarter, which suffered its largest contraction for over half a century.

'Although to some extent this is old news, it does serve to emphasise the size of the hole out of which the UK must climb.'

Shadow Chancellor George Osborne said: 'We hope the recovery comes
as soon as possible but sadly we now know this recession has been
longer and deeper than we had thought. 'This also means that in the
future unemployment will be higher and Labour's debt crisis will be
even worse.'

Yesterday's output figures represent the ONS's third and most
detailed analysis of Britain's first-quarter performance. The
government department said GDP fell an annual 2.4 per cent in the first
quarter, compared with a 1.9 per cent estimate previously.

It means the peak-to-trough fall in GDP so far during the downturn
exceeds declines in the recession of the 1970s, early 1980s and early
1990s.

Construction was particularly weak, with revised figures revealing a 6.9 per cent plunge.

But some analysts stressed the economy has come a long way since the
period reflected in the report. And even in yesterday's first-quarter
numbers a few seeds of recovery can be identified, they said.

The burden of interest repayments has tumbled to the lowest level on
record, thanks to near-zero official interest rates, the report showed.

Household interest payments also fell from a peak of 8.7 per cent of
personal incomes in the third quarter of 2007 to 1.8 per cent in the
first quarter.